Family & Community Alternative Learning
Massachusetts Charter Schools

Charter School Technical Advisory 05-1:
Approval of Loans Beyond Charter Terms

Under the charter school statute, G.L. c. 71, § 89(j)(6), the Board of Education must approve the term of repayment of any charter school's debt if it exceeds the duration of the school's charter. This includes instances in which a charter school may guarantee a loan with a repayment term that exceeds the duration of the school's charter. This Technical Advisory outlines the timeline and process required in order to submit such a request for consideration by the Commissioner and possible placement on the agenda for a meeting of the Board of Education.

The Board of Education considers approving such loan requests, upon at recommendation of the Commissioner, at one of its regularly scheduled meetings. The schedule for Board of Education meetings can be found at http://www.doe.mass.edu/boe/boedate.html.

In order for the Commissioner to consider recommending to the Board of Education that they approve a school's request, the school must submit a number of documents to the Charter School Office. The Charter School Office must receive the documents at least 20 days before the Board of Education meeting at which the school would like the Board to consider its request. These documents, submitted under penalties of perjury, include:

• A letter from the school's Board of Trustees requesting approval of the term of repayment of the charter school debt, addressed to the Commissioner and the Board of Education, with a copy to the Charter School Office. This letter must

  • provide a description of the proposed loan; including its purpose and term length, a description of the financing arrangements, and a statement about how the loan will benefit the school;

  • include a statement that the school's Board of Trustees "voted to request approval of the term of repayment of this financing on [DATE] at a meeting held in compliance with the Open Meeting Law;" and

  • include a statement that the Board of Trustees has authorized the person signing the letter to make the request on their behalf.

• A five-year operating budget for the school that includes repayment of the proposed loan(s).

• Loan agreement(s) or commitment letter(s), if available. The loan agreement(s) or commitment letter(s) must contain the following language:
  

  The parties to the loan(s) acknowledge and agree that the Commonwealth of Massachusetts, including but not limited to the Board and the Department of Elementary and Secondary Education, provides no representations or guarantees with respect to these loans and has no liability for any portion of the loans. Furthermore, specifically and without limitation, the Board's approval of the loan has no impact on any action that the Massachusetts Board of Education may choose to take in the future with respect to probation, revocation, or renewal of the School's charter.

• If the loan agreement(s) or commitment letter(s) is not yet available or the language quoted above is not contained therein, a letter from the school's proposed lender(s) outlining the anticipated terms of the loan and the lender's understanding that

  • the Commonwealth of Massachusetts, including but not limited to the Board and the Department of Elementary and Secondary Education, provides no representations or guarantees with respect to these loans and that the Commonwealth of Massachusetts, including but not limited to the Board and the Department of Elementary and Secondary Education, has no liability for any portion of the loans;

  • the approval by the Board of Education of the term of repayment of loan(s) has no impact on any action that the Massachusetts Board of Education may choose to take in the future with respect to probation, revocation, or renewal of the School's charter; and

  • any approval of the term of repayment by the Board of Education would be explicitly conditioned upon the inclusion of this language in the loan agreement(s).

Please note that the submission of these documents is required before the Commissioner will consider recommending that the Board of Education approve the term of repayment of any charter school debt that exceeds the duration of a school's charter. The suggested timelines are subject to the complexity of the issues involved and the schedules of the Commissioner and the Board of Education. Charter schools are strongly encouraged to plan ahead regarding requests for approval of a term of repayment that exceeds the duration of the school's charter.